Nikola convertibles on tap, maybe; Repligen gains; Evergy active; Evolent down outright

By Abigail W. Adams

Portland, Me., Dec. 7 – The convertibles primary market remained active on Thursday with one deal on deck, although sources were skeptical about whether the deal would get done.

Nikola Corp. plans to price $200 million of green convertible notes due Dec. 15, 2026 after the market close on Thursday alongside a concurrent follow-on offering of common stock.

Stock plunged well below the $1 Nasdaq listing requirement on the heels of the concurrent offerings, complicating an already complicated deal.

While sources questioned the ability of Nikola to complete its Securities and Exchange Commission-registered offering, $600 million in new supply made its way into the secondary space via an exchange offering.

Repligen Corp. sold $600 million of new 1% convertible notes due 2028 in privately negotiated exchange and subscription agreements with holders of its 0.375% convertible notes due 2024 and new investors.

The new notes dominated activity in the secondary space on Thursday and put a strong performance in on debut.

While activity in the secondary space moderated after the wave of new paper that priced earlier in the week, the market remained firm on a strong day for equities.

The Dow Jones industrial average closed Thursday up 63 points, or 0.17%, the S&P 500 index closed up 0.80%, the Nasdaq Composite index closed up 1.37% and the Russell 2000 index closed up 0.87%.

There was $454 million in reported volume in the late afternoon.

Evergy Inc.’s new 4.5% convertible notes due 2027 (BBB) were active although with little movement in price.

Evolent Health Inc.’s 3.5% convertible notes due 2029 were down outright but largely unchanged dollar-neutral on a rough day for the stock.

Nikola eyed

Nikola plans to price $200 million of green convertible notes due Dec. 15, 2026 with price talk for a coupon of 7.75% to 8.25% and an initial conversion premium of 20% to 25%, according to a market source.

Concurrently, the company is pricing a follow-on offering of $100 million of common stock.

The offering was not one that sources expressed an interest in with Nikola a scandal-plagued company that many have on bankruptcy watch.

“Gotta be a death spiral,” a source said.

While one source pegged assumptions as 1,500 basis points over SOFR and a 45% vol., the notes were not playable on hedge with borrow costs of 20%.

“If you can’t borrow stock, you can’t do it,” a source said.

The convertible notes offering was essentially a glorified equity offering.

And while few expressed interest in it, there must have been a buyer base established prior to launch, sources said.

Nikola’s stock was destroyed on the concurrent offerings with stock now trading firmly below the $1 Nasdaq listing requirement after wavering on either side of $1 since mid-November.

Nikola’s stock closed Thursday at $0.75, a decrease of 23.39%.

Repligen trades up

Repligen sold $600 million of new 1% convertible notes due 2028 in privately negotiated exchange and subscription agreements with holders of its 0.375% convertible notes due 2024 and new investors.

The company issued $309.9 million of 1% notes for $217.7 million in principal of the company’s outstanding 0.375% notes due 2024.

The company also sold an additional $290.1 million of the 1% notes for cash, according to a market source.

The new 1% notes dominated activity in the secondary space and were putting in a strong performance.

They were marked at 103 bid, 104 offered versus a stock price of $156.20 pre-market open, a source said.

The notes continued to climb and were trading at 105 versus a stock price of $162.16 in the late afternoon.

There was $30 million in reported volume.

Repligen’s stock traded to a low of $154.71 and a high of $164.50 before closing at $161.87, up 3.63%.

Evergy active

Evergy’s recently priced 4.5% convertible notes due 2027 were active on Thursday although with little movement in price.

The 4.5% notes were trading at 101.25 versus a stock price of $51.86 in the late afternoon, according to a market source.

There was $15 million in reported volume.

Evergy’s stock traded to a high of $52.12 and a low of $51.38 before closing at $51.70, off 0.48%.

Evergy became the latest investment-grade utility company to tap the convertible market with a $1.2 billion offering of the 4.5% notes that priced at par on Monday. The issue’s greenshoe was later exercised, lifting the deal to $1.4 billion.

The notes have put in a solid performance in the aftermarket logging both outright and dollar-neutral gains.

Evolent down outright

Evolent Health’s new 3.5% convertible notes due 2029 were down outright on a rough day for the company’s stock although the notes were largely moving in line dollar-neutral.

They fell about 2 points outright to a 103-handle with stock off more than 5%.

The notes were trading in the 103 to 103.5 context in the late afternoon, a source said.

There was $8 million in reported volume.

Evolent Health’s stock traded to a low of $26.62 and a high of $28.18 before closing at $27.67, down 2.26%.

Mentioned in this article:

Evergy Inc. Nasdaq: EVRG

Evolent Health Inc. NYSE: EVH

Nikola Corp. Nasdaq: NKLA

Repligen Corp. Nasdaq: RGEN

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